Pidilite Industries (PIDI IN)

Rating: HOLD | CMP: Rs1,670 | TP: Rs1,739

January 29, 2021 Input costs put a spanner in the wheel

Q3FY21 Result Update Quick Pointers:

☑ Change in Estimates | ☑ Target | ☑ Reco . Consolidated C&B volumes grew 20% on broad based growth

Change in Estimates . VAM prices jump from USD930 to USD1300, margin pressure likely Current Previous FY22E FY23E FY17E FY18E . PAPL (Huntsman) reported EBIDTA margins of 43.7%. Rating HOLD Under Review Target Price 1,739 - We have increased our sales estimate by 5.94/4.6/4.6% for FY21/22/23 on the Sales (Rs. m) 88,571 1,01,196 84,673 96,777 % Chng. 4.6 4.6 back of strong numbers reported by PIDI aided by continued demand EBITDA (Rs. m) 18,450 23,145 19,859 22,950 momentum in Rural areas and revival in urban demand. B2B segment has % Chng. (7.1) 0.9 EPS (Rs.) 25.1 32.1 28.1 32.7 also benefited from resurgence in Industrial activity. We remain positive on % Chng. (10.7) (1.9) PIDI given its strong presence in water proofing and construction chemicals due to first mover advantage and strong connect with trade. We believe Key Financials - Consolidated investment in Huntsman will allow PIDI to consolidate Araldite’s leadership Y/e Mar FY20 FY21E FY22E FY23E position in epoxy based adhesives by leveraging its strong distribution Sales (Rs. m) 72,945 71,576 88,571 1,01,196 network. We expect Gross and EBIDTA margins to come under pressure EBITDA (Rs. m) 15,760 16,585 18,450 23,145 given VAM prices have risen to USD 1300 levels and are unlikely to soften for Margin (%) 21.6 23.2 20.8 22.9 PAT (Rs. m) 11,772 11,458 12,757 16,281 next 1-2 quarters. We estimate 25.8% and 28.6% CAGR in standalone and EPS (Rs.) 23.2 22.6 25.1 32.1 Consol EPS over FY21-23. We shift our target price base from PE to DCF and Gr. (%) 24.4 (2.7) 11.3 27.6 assign a target price of Rs1739 (earlier under review). Assign HOLD and DPS (Rs.) 13.5 - 8.0 9.0 Yield (%) 0.8 - 0.5 0.5 recommend accumulation on weakness for long term gains. RoE (%) 27.4 22.8 21.2 23.1 RoCE (%) 31.7 28.3 26.1 28.4 Consolidated C&B volumes grew 20%: Consolidated Net sales increased EV/Sales (x) 11.5 11.8 9.6 8.3 EV/EBITDA (x) 53.0 51.1 45.9 36.3 19.3%(16% Excluding Huntsman) to Rs 22.99bn (est Rs 21.87bn). Consolidated PE (x) 72.1 74.0 66.5 52.1 C&B segment volumes grew in excess of 20% and Standalone volumes grew 19% P/BV (x) 19.0 15.2 13.1 11.1 driven by 22% growth in C&B and 12% growth in B2B. Gross margins at 54.8% (est 53.5%) increased 100bps YoY but decreased 120bps QoQ. EBIDTA increased Key Data PIDI.BO | PIDI IN 38.4% (33% excluding Huntsman) to Rs 6.41bn (est Rs 5.6bn). Margins expanded 52-W High / Low Rs.1,850 / Rs.1,186 380bps YoY to 27.9% (est 25.6%) on account of higher GRM’s and lower employee Sensex / Nifty 46,286 / 13,635 cost and other expenses. Adj. PAT increased 29.1% (23% excluding Huntsman) Market Cap Rs.848bn/ $ 11,628m Shares Outstanding 508m to Rs 4.45bn (est Rs 3.98bn). 3M Avg. Daily Value Rs.3421.23m Consumer and Bazaar sales/EBIT increased 25.1%/43.5% to Rs 18.48bn/Rs 6. Shareholding Pattern (%) 45bn.Industrial Products sales increased 2.7% to Rs 4.75bn but EBIT decreased Promoter’s 70.19 18.1% Rs 558m. Subsidiaries: Imputed sales increased 30.1% to Rs3.42bn and Foreign 11.39 Domestic Institution 8.24 EBIDTA stood at Rs 681m against Rs 338m in Q3FY20. Huntsman Public & Others 10.18 revenue/EBITDA/PAT stood at Rs 636mn/250mn/210mn for almost 2 months of Promoter Pledge (Rs bn) - operations

Stock Performance (%) Concall Takeaways: 1) Demand momentum continued in rural areas and strong 1M 6M 12M recovery witnessed in urban areas led to broad based recovery. 2) Resurgence in Absolute (4.8) 21.8 11.5 Relative (2.1) 0.2 (0.7) industrial activity has led to healthy volume growth in the B2B segment. 3) VAM

Consumption cost was USD 875 for 3Q however the spot rates have risen to USD Amnish Aggarwal 1300 levels. Expect prices to settle in 5-6 months 5) No price hike taken so far in [email protected] | 91-22-66322233 C&B, may take a hike, will not cover the RM inflation completely. Some price hike Charmi Mehta taken in B2B. 6) EBITDA margins to remain in the range of 21-24%. Ad spends [email protected] | 91-22-66322256 back to 3.5-4% of revenues 7) Maintains strong presence in water proofing used Heet Vora during construction, did not witness market share loss due to paint companies 8) [email protected] | 91-22-66322381 Capex will continue at 4-5% of revenues.

January 29, 2021 1 Pidilite Industries

Consolidated Revenue up 19.3%, EBITDA margins expand 380bps Consolidated Q3FY21 Q3FY20 YoY gr. (%) Q2FY21 9MFY21 9MFY20 YoY gr. (%) Net Revenue 22,990 19,266 19.3 18,803 50,572 57,498 (12.0) Gross Profit 12,588 10,363 21.5 10,520 27,802 30,368 (8.5) Margin % 54.8 53.8 1.0 55.9 55.0 52.8 2.2 Other Expenditure 6,180 5,731 7.8 5,393 15,603 17,617 (11.4) EBITDA 6,408 4,632 38.4 5,126 12,198 12,751 (4.3) Margin % 27.9 24.0 3.8 27.3 24.1 22.2 1.9 Depreciation 495 419 18.2 479 1,435 1,198 19.7 Interest 121 82 47.4 87 298 238 25.1 Other Income 204 398 (48.8) 217 621 1,355 (54.2) PBT 5,997 4,530 32.4 4,778 11,086 12,670 (12.5) Tax 1,548 1,084 42.8 1,220 2,926 2,821 3.7 Tax rate % 25.8 23.9 25.5 26.4 22.3 Adj PAT 4,449 3,445 29.1 3,558 8,160 9,849 (17.1) Source: Company, PL

Standalone C&B volumes post strong growth VAM prices up 13.5% YoY 36.2% QoQ 1500 Volume Gr. Realisation Gr. 1294 1286 1395 30.0 22.1 1400 13.4 1235 20.0 6.1 7.4 1300 10.0 4.7 2.0 1190 3.9 2.9 -1.7 -0.4 -1.7 1200 0.0 1032 4.0 3.9 1100 -10.0 -0.9 2.0 -0.1 -3.1 1000 1065

-20.0 USD/MT -30.0 900 -40.0 800 897 -50.0 700 793 -60.0 713 -58.6 600

-70.0

Jun-18

Jun-19

Jun-20

Mar-18

Mar-19

Mar-20

Dec-17

Sep-18

Dec-18

Sep-19

Dec-19

Sep-20

Dec-20

3QFY19

4QFY19

1QFY20

2QFY20

3QFY20

4QFY20

1QFY21 2QFY21 3QFY21 Source: Company, PL Source: Company, PL

C&B grew 25.1% aided by continued demand in rural areas and strong recovery in urban areas Segmental 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 1QFY21 2QFY21 3QFY21 Consumer and Bazaar Sales (Rs m) 15974 11975 15743 15350 14783 11244 7020 15277 18489 Growth (%) 22.1 -2.4 -1.2 1.3 -7.5 -6.1 -55.4 -0.5 25.1 EBIT (Rs m) 3584 2874 4625 3889 4495 2787 1320 5324 6451 EBIT Growth % -1.8 1.9 14.8 6.2 25.4 -3.0 -71.5 36.9 43.5 EBIT margin % 22.4 24.0 29.4 25.3 30.4 24.8 18.8 34.8 34.9 Industrial Products Sales (Rs m) 2618 4549 4592 2899 4626 4411 1882 3771 4751 Growth (%) 6.0 66.8 78.3 14.2 76.7 -3.0 -59.0 30.1 2.7 EBIT (Rs m) 309 565 453 525 681 732 -227 290 558 EBIT Growth % -25.8 20.3 19.3 24.9 120.2 29.7 -150.1 -44.8 -18.1 EBIT margin % 11.8 12.4 9.9 18.1 14.7 16.6 -12.0 7.7 11.7 Source: Company, PL

January 29, 2021 2 Pidilite Industries

PAPL (Huntsman) posts stellar margins during first 2 months of operation

. Domestic Subsidiaries in the C&B segment have shown healthy growth.

. Subsidiaries in the B2B segment have shown signs of recovery in the latter end of the quarter.

. Resurgence in industrial activity has resulted in increased enquiry and order booking, however impact on revenues to be seen in coming qtrs.

. Pidilite Adhesives Pvt Ltd (previously named Huntsman) reported strong margins (~44%) aided by better mix and lower input cost. Will invest in distribution expansion and increasing geographical presence going forward which will lower margins.

PAPL (Huntsman) reports margins of 43.7% Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Sales - (Rs mn) NINA Percept 634 557 787 700 75 359 612 ICA-Pidilite 534 459 473 392 117 464 586 CIPY 318 248 339 309 76 188 302 PAPL (Huntsman) 591 Others 168 137 151 153 27 219 221 Total 1654 1401 1750 1554 295 1230 2312 Sales Growth (YoY) NINA & Percept -17.1% -24.7% -4.5% -2.9% -88.2% -35.5% -22.2% ICA-Pidilite 43.9% 3.6% 8.0% -9.2% -78.1% 1.1% 23.9% CIPY -15.0% -30.3% -15.9% -26.7% -76.1% -24.2% -10.9% PAPL (Huntsman) NA Others 5.0% -12.2% 7.9% -16.5% -83.9% 59.9% 46.4% Total -1.0% -17.3% -3.0% -11.6% -82.2% -12.2% -32.1% EBITDA (Rs mn) NINA & Percept 63 -16 80 -17 -153 -65 -17 ICA-Pidilite 54 71 78 40 -57 112 145 CIPY 36 24 68 26 -61 -8 38 PAPL (Huntsman) 258 Others 23 12 7 20 -37 30 -12 Total 176 91 233 69 -308 69 412 EBITDA margin % NINA & Percept 9.9% -2.9% 10.2% -2.4% -204.0% -18.1% -2.8% ICA-Pidilite 10.1% 15.5% 16.5% 10.2% -48.7% 24.1% 24.7% CIPY 11.3% 9.7% 20.1% 8.4% -80.3% -4.3% 12.6% PAPL (Huntsman) 43.7% Others 13.7% 8.8% 4.6% 13.1% -137.0% 13.7% -5.4% Total 10.6% 6.5% 13.3% 4.4% -104.4% 5.6% 23.9% EBITDA grth (YoY) NINA & Percept -37.6% -140.0% -11.1% -119.3% -342.9% 306.3% -121.3% ICA-Pidilite 184.2% -2466.7% 550.0% -433.3% -205.6% 57.7% 85.9% CIPY -7.7% -48.9% 17.2% -59.4% -269.4% -133.3% -44.1% PAPL (Huntsman) NA Others 53.3% 33.3% -30.0% -20.0% -260.9% 150.0% -271.4% Total 1.1% -2.2% 37.1% -58.2% -275.0% -24.2% 76.8% Source: Company, PL

January 29, 2021 3 Pidilite Industries

IBD – Americas leads IBD growth

2Q21 International business (IBD) sales reported healthy double-digit constant currency growth led by Americas. EBITDA stood at Rs 242mn on the back of gains in Asia and Americas. Americas EBITDA includes tax gain of Rs 95 mn pertaining to earlier years.

Americas sales grew 47.8%. EBITDA was at Rs 103mn. Asia: Sales grew 10.7% with EBITDA of Rs 141mn. Middle East & Africa sales grew by 6.7% with EBITDA loss at Rs 2mn.

Brazil business was good on account of Corona voucher which helped increasing real estate activities and USA saw strong growth in Arts and Hobby segment aiding in strong growth witnessed in Americas.

International subsidiaries report healthy growth led by Americas Subsidiaries Q3FY20 Q4FY20 Q1FY21 Q2FY21 Q3FY21 Sales (Rs. m) 1,506 1,341 953 1,765 1,844 Americas 520 417 383 812 711 Asia 615 552 303 568 702 Middle East & Africa 371 372 267 385 431 Sales growth (YoY) 10.3 3.6 (35.9) 19.3 21.4 Americas 17.1 (14.4) (25.2) 51.8 47.8 Asia 3.7 (4.0) (48.7) 0.7 10.7 Middle East & Africa 13.1 12.0 (30.3) 1.3 6.7 EBITDA (Rs m) 94.2 (2.0) (1.0) 366.0 242.0 Americas 18.0 (70.0) 15.0 292.0 103.0 Asia 77.0 72.0 15.0 88.0 141.0 Middle East & Africa (0.8) (4.0) (31.0) (14.0) (2.0) EBITDA (margin %) 6.3 (0.1) (0.1) 20.7 13.1 Americas 3.5 (16.8) 3.9 36.0 14.5 Asia 12.5 13.0 5.0 15.5 20.1 Middle East & Africa (0.2) (1.1) (11.6) (3.6) (0.5) Source: Company, PL

January 29, 2021 4 Pidilite Industries

Financials

Income Statement (Rs m) Balance Sheet Abstract (Rs m) Y/e Mar FY20 FY21E FY22E FY23E Y/e Mar FY20 FY21E FY22E FY23E Net Revenues 72,945 71,576 88,571 1,01,196 Non-Current Assets YoY gr. (%) 3.1 (1.9) 23.7 14.3 Cost of Goods Sold 34,025 32,879 43,549 47,579 Gross Block 27,483 32,703 38,023 43,470 Gross Profit 38,920 38,696 45,022 53,617 Tangibles 24,146 29,366 34,686 40,133 Margin (%) 53.4 54.1 50.8 53.0 Intangibles 3,337 3,337 3,337 3,337 Employee Cost 9,272 9,046 10,436 11,895 Other Expenses - - - - Acc: Dep / Amortization 11,257 13,568 16,365 19,678 Tangibles 11,257 13,568 16,365 19,678 EBITDA 15,760 16,585 18,450 23,145 Intangibles - - - - YoY gr. (%) 15.2 5.2 11.2 25.5 Margin (%) 21.6 23.2 20.8 22.9 Net fixed assets 16,226 19,135 21,658 23,792 Tangibles 12,888 15,798 18,321 20,455 Depreciation and Amortization 1,699 1,909 2,282 2,656 Intangibles 3,337 3,337 3,337 3,337

EBIT 14,061 14,676 16,168 20,490 Capital Work In Progress 2,593 2,976 3,476 3,976 Margin (%) 19.3 20.5 18.3 20.2 Goodwill 1,840 20,740 22,840 22,840 Non-Current Investments 5,134 5,262 5,394 5,529 Net Interest 336 254 252 250 Net Deferred tax assets (693) (1,260) (1,679) (1,019) Other Income 1,494 910 1,154 1,552 Other Non-Current Assets 1,823 1,861 2,303 2,631

Profit Before Tax 15,219 15,333 17,070 21,792 Current Assets Margin (%) 20.9 21.4 19.3 21.5 Investments 7,197 1,062 2,948 8,769 Inventories 9,295 8,648 11,454 12,514 Total Tax 3,477 3,910 4,353 5,557 Trade receivables 10,885 10,726 13,278 15,173 Effective tax rate (%) 22.8 25.5 25.5 25.5 Cash & Bank Balance 7,033 1,583 1,035 1,213 Other Current Assets 1,994 1,666 2,057 2,348 Profit after tax 11,742 11,423 12,717 16,235 Total Assets 65,356 74,847 87,569 99,835 Minority interest - - - - Share Profit from Associate 30 35 40 46 Equity Equity Share Capital 508 508 508 508 Adjusted PAT 11,772 11,458 12,757 16,281 Other Equity 44,048 55,449 64,086 75,739 YoY gr. (%) 24.4 (2.7) 11.3 27.6 Total Networth 44,556 55,957 64,594 76,247 Margin (%) 16.1 16.0 14.4 16.1 Extra Ord. Income / (Exp) (552) - - - Non-Current Liabilities Long Term borrowings 251 238 228 219 Reported PAT 11,221 11,458 12,757 16,281 Provisions 520 441 546 624 YoY gr. (%) 20.9 2.1 11.3 27.6 Other non current liabilities 831 1,056 1,333 1,688 Margin (%) 15.4 16.0 14.4 16.1 Current Liabilities Other Comprehensive Income 35 - - - ST Debt / Current of LT Debt 1,440 1,440 1,440 1,440 Total Comprehensive Income 11,256 11,458 12,757 16,281 Trade payables 6,210 5,405 7,159 7,821 Equity Shares O/s (m) 508 508 508 508 Other current liabilities 8,497 6,742 8,340 8,591 EPS (Rs) 23.2 22.6 25.1 32.1 Total Equity & Liabilities 65,357 74,846 87,567 99,834 Source: Company Data, PL Research Source: Company Data, PL Research

January 29, 2021 5 Pidilite Industries

Cash Flow (Rs m) Key Financial Metrics

Y/e Mar FY20 FY21E FY22E FY23E YearY/e Mar FY20 FY21E FY22E FY23E

PBT 15,219 15,333 17,070 21,792 Per Share(Rs) Add. Depreciation 1,699 1,909 2,282 2,656 EPS 23.2 22.6 25.1 32.1 Add. Interest 336 254 252 250 CEPS 26.5 26.3 29.6 37.3 Less Financial Other Income 1,494 910 1,154 1,552 BVPS 87.7 110.2 127.2 150.1 Add. Other (1,459) (910) (1,154) (1,552) FCF 26.0 (11.8) 5.3 7.0 Op. profit before WC changes 15,796 16,585 18,450 23,145 DPS 13.5 - 8.0 9.0 Net Changes-WC 6,365 5,413 (3,988) (8,767) Return Ratio(%) Direct tax (3,477) (3,910) (4,353) (5,557) RoCE 31.7 28.3 26.1 28.4 Net cash from Op. activities 18,683 18,088 10,108 8,822 ROIC 27.5 20.3 19.3 22.8 Capital expenditures (5,462) (24,099) (7,405) (5,289) RoE 27.4 22.8 21.2 23.1 Interest / Dividend Income 1,494 910 1,154 1,552 Balance Sheet Others (671) (82) (79) (76) Net Debt : Equity (x) (0.3) 0.0 0.0 (0.1) Net Cash from Invt. activities (4,639) (23,270) (6,331) (3,814) Net Working Capital (Days) 70 71 72 72 Issue of share cap. / premium (409) - - - Valuation(x) Debt changes 581 (13) (10) (8) PER 72.1 74.0 66.5 52.1 Dividend paid (8,268) - (4,064) (4,572) P/B 19.0 15.2 13.1 11.1 Interest paid (336) (254) (252) (250) P/CEPS 63.0 63.5 56.4 44.8 Others 29 - - - EV/EBITDA 53.0 51.1 45.9 36.3 Net cash from Fin. activities (8,403) (267) (4,326) (4,830) EV/Sales 11.5 11.8 9.6 8.3 Net change in cash 5,641 (5,449) (548) 178 Dividend Yield (%) 0.8 - 0.5 0.5 Free Cash Flow 13,221 (6,010) 2,703 3,532 Source: Company Data, PL Research Source: Company Data, PL Research

Quarterly Financials (Rs m) Y/e Mar Q4FY20 Q1FY21 Q2FY21 Q3FY21 Net Revenue 15,447 8,778 18,803 22,990 YoY gr. (%) (5.8) (56.5) 4.1 19.3 Raw Material Expenses 6,895 4,085 8,284 10,402 Gross Profit 8,552 4,694 10,520 12,588 Margin (%) 55.4 53.5 55.9 54.8 EBITDA 3,009 664 5,126 6,408 YoY gr. (%) 7.9 (85.0) 39.2 38.4 Margin (%) 19.5 7.6 27.3 27.9 Depreciation / Depletion 501 461 479 495 EBIT 2,508 203 4,648 5,913 Margin (%) 16.2 2.3 24.7 25.7 Net Interest 98 91 87 121 Other Income 140 200 217 204 Profit before Tax 2,550 312 4,778 5,997 Margin (%) 16.5 3.6 25.4 26.1 Total Tax 656 159 1,220 1,548 Effective tax rate (%) 25.7 50.8 25.5 25.8 Profit after Tax 1,894 153 3,558 4,449 Minority interest - - - - Share Profit from Associates 1 5 6 16 Adjusted PAT 1,895 158 3,564 4,464 YoY gr. (%) (23.1) (94.6) 3.0 29.6 Margin (%) 12.3 1.8 19.0 19.4 Extra Ord. Income / (Exp) (330) - - - Reported PAT 1,565 158 3,564 4,464 YoY gr. (%) (36.1) (94.6) 9.7 29.5 Margin (%) 10.1 1.8 19.0 19.4 Other Comprehensive Income 36 (25) (38) 29 Total Comprehensive Income 1,601 133 3,527 4,493 Avg. Shares O/s (m) 508 508 508 508 EPS (Rs) 3.7 0.3 7.0 8.8 Source: Company Data, PL Research

January 29, 2021 6 Pidilite Industries

Price Chart Recommendation History

(Rs) No. Date Rating TP (Rs.) Share Price (Rs.) 1850 1 07-Jan-21 UR - 1,795

1603 2 06-Nov-20 Hold 1,518 1,595 3 08-Oct-20 Hold 1,415 1,487 1356 4 07-Aug-20 Hold 1,415 1,378

1110 5 08-Jul-20 Hold 1,418 1,399 6 18-Jun-20 Hold 1,317 1,391 863

7 13-Apr-20 Hold 1,327 1,349

Jul -18 Jul

Jul -19 Jul

Jul -20 Jul

Jan -18 Jan

Jan -Jan19 Jan -20 Jan Jan -Jan21 8 30-Jan-20 Hold 1,447 1,522

Analyst Coverage Universe Sr. No. Company Name Rating TP (Rs) Share Price (Rs) 1 Hold 2,829 2,740 2 Avenue Supermarts BUY 3,296 2,968 3 Bajaj Electricals BUY 647 637 4 BUY 4,301 3,540 5 Colgate Palmolive Hold 1,651 1,564 6 Crompton Greaves Consumer Electricals BUY 447 412 7 Accumulate 539 534 8 BUY 568 483 9 GlaxoSmithKline Consumer Healthcare Hold 9,377 9,247 10 India Hold 1,126 1,131 11 BUY 2,502 2,391 12 ITC BUY 254 205 13 Jubilant FoodWorks UR - 2,789 14 Kansai Nerolac Paints UR - 613 15 Accumulate 440 411 16 Nestle India Hold 17,640 18,515 17 Pidilite Industries UR - 1,795 18 Polycab India BUY 1,247 1,278 19 UR - 1,573 20 UR - 882

PL’s Recommendation Nomenclature (Absolute Performance) Buy : > 15% Accumulate : 5% to 15% Hold : +5% to -5% Reduce : -5% to -15% Sell : < -15% Not Rated (NR) : No specific call on the stock Under Review (UR) : Rating likely to change shortly

January 29, 2021 7 Pidilite Industries

ANALYST CERTIFICATION (Indian Clients)

We/I, Mr. Amnish Aggarwal- MBA, CFA, Ms. Charmi Mehta- CA, Mr. Heet Vora- CA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. (US Clients)

The research analysts, with respect to each issuer and its securities covered by them in this research report, certify that: All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their securities; and No part of his or her or their compensation was, is or will be directly related to the specific recommendation or views expressed in this research report. DISCLAIMER Indian Clients Prabhudas Lilladher Pvt. Ltd, , India (hereinafter referred to as “PL”) is engaged in the business of Stock Broking, Portfolio Manager, Depository Participant and distribution for third party financial products. PL is a subsidiary of Prabhudas Lilladher Advisory Services Pvt Ltd. which has its various subsidiaries engaged in business of commodity broking, investment banking, financial services (margin funding) and distribution of third party financial/other products, details in respect of which are available at www.plindia.com. This document has been prepared by the Research Division of PL and is meant for use by the recipient only as information and is not for circulation. This document is not to be reported or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security. The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness of the same. Neither PL nor any of its affiliates, its directors or its employees accepts any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein. Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor. Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies referred to in this report and they may have used the research material prior to publication. PL may from time to time solicit or perform investment banking or other services for any company mentioned in this document. PL is in the process of applying for certificate of registration as Research Analyst under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 PL submits that no material disciplinary action has been taken on us by any Regulatory Authority impacting Equity Research Analysis activities. PL or its research analysts or its associates or his relatives do not have any financial interest in the subject company. PL or its research analysts or its associates or his relatives do not have actual/beneficial ownership of one per cent or more securities of the subject company at the end of the month immediately preceding the date of publication of the research report. PL or its research analysts or its associates or his relatives do not have any material conflict of interest at the time of publication of the research report. PL or its associates might have received compensation from the subject company in the past twelve months. PL or its associates might have managed or co-managed public offering of securities for the subject company in the past twelve months or mandated by the subject company for any other assignment in the past twelve months. PL or its associates might have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months. PL or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months PL or its associates might have received any compensation or other benefits from the subject company or third party in connection with the research report. PL encourages independence in research report preparation and strives to minimize conflict in preparation of research report. PL or its analysts did not receive any compensation or other benefits from the subject Company or third party in connection with the preparation of the research report. PL or its Research Analysts do not have any material conflict of interest at the time of publication of this report. It is confirmed that Mr. Amnish Aggarwal- MBA, CFA, Ms. Charmi Mehta- CA, Mr. Heet Vora- CA Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. The Research analysts for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report. The research analysts for this report has not served as an officer, director or employee of the subject company PL or its research analysts have not engaged in market making activity for the subject company Our sales people, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. PL and its associates, their directors and employees may (a) from time to time, have a long or short position in, and buy or sell the securities of the subject company or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company or act as an advisor or lender/borrower to the subject company or may have any other potential conflict of interests with respect to any recommendation and other related information and opinions. US Clients This research report is a product of Prabhudas Lilladher Pvt. Ltd., which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account. This report is intended for distribution by Prabhudas Lilladher Pvt. Ltd. only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor. In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Prabhudas Lilladher Pvt. Ltd. has entered into an agreement with a U.S. registered broker-dealer, Marco Polo Securities Inc. ("Marco Polo"). Transactions in securities discussed in this research report should be effected through Marco Polo or another U.S. registered broker dealer.

Prabhudas Lilladher Pvt. Ltd. 3rd Floor, Sadhana House, 570, P. B. Marg, Worli, Mumbai-400 018, India | Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209 www.plindia.com

January 29, 2021 8